Sales tax receipts show economic growth

■ Low cost of living makes Siloam Springs an attractive area for new businesses.

Siloam Springs’ sales tax receipts took a slight dip in September after a 39-month streak of positive growth.

Sales tax receipts for September were $637,117, down $9,324 from the same month the previous year, according to the October issue of City & Town magazine. It is the first time that sales taxes have been down in comparison to the previous year since May of 2014.

“That’s an impressive run of positive news and growth in the local economy,” said Wayne Mays, president and CEO of the Siloam Springs Chamber of Commerce. “Combine that with the very strong cost of living numbers, and we have an attractive economy to present to industrial and business prospects.”

The city’s sales tax receipts come from its 2 percent sales tax. The total sales tax rate in Siloam Springs is 9.5 percent. The money collected is used for utility infrastructure, repayment of wastewater treatment plant bonds, the city’s general fund, public safety and the street department.

Siloam Springs’ tax receipts have also shown consistent year over year growth since 2012, as far back as recent records have been kept. Despite the recent dip in sales tax receipts in September, even conservative estimates show that the numbers are on track to exceed last year’s total of $7.22 million.

Sales tax receipts are the best indicator of economic growth, according to Nathan Reed, director of economic development and finance for the chamber.

Shopping local during the holiday season is an important way that people can keep tax dollars in their community, Reed said. If customers make their purchases in Benton County, at least some of the tax dollars make their way back to Siloam Springs through the county sales tax, he said.

“When you have sales tax growth, it’s not necessarily that people are spending more here,” Reed said. “It’s that we have more options and we’re growing the options that are here as well.”

Two years ago, the chamber’s economic development team, which includes officials from the chamber, Main Street Siloam Springs and the city, commissioned an economic survey, Mays said. The results showed that Siloam Springs has a lot of sales tax leakage in the retail sector, both to businesses on the Interstate 49 corridor and to online retailers.

“Leakage means that business that could be done in your community is done somewhere else,” Mays said. “If we don’t have the kind of stores here people are wanting to shop at, they are forced to go somewhere else.”

The economic development team began working with local development companies to bring more retailers into Siloam Springs. In the past several years, there has been a real uptick and improvement in retail in the city, he said.

One example of this is the recent addition of Furniture Factory Outlet on U.S. Highway 412. In the past, Siloam Springs residents would have to travel to Springdale or Fayetteville to find similar businesses but now they can shop close to home.

“It’s a work in progress to try to plug the retail gaps and plug them in the right way so that people are not taking their retail dollars that they’re making and earning here, and spending it in another town, so we have lots of good work to do,” Mays said.

While Siloam Springs residents may be spending some of their money in larger communities to the east, many northeast Oklahoma residents are spending their money in Siloam Springs. Up

to 40 percent of the people who work and do business in Siloam Springs actually live in Oklahoma and commute across the state line, according to Mays and Reed.

Having businesses like Furniture Factory Outlet and restaurants such as Cotton Patch and Rib Crib in Siloam Springs, means that Oklahoma residents can do more shopping here, they said.

Another indicator of Siloam Springs’ economic health is the cost of living for the area, according to Mays and Reed. According to the cost of living index compiled by the Council for Community and Economic Research, the cost of living for the Fayetteville, Springdale, Rogers metro area, which includes Siloam Springs, is 10.9 percent below the national average.

The cost of living index considers expenses such as groceries, housing, utilities, transportation, healthcare and miscellaneous goods and services when calculating the total. Individually, the Northwest Arkansas metro area is 8.1 percent below the national average in utilities, 9.5 percent below the national average in groceries, 9.1 percent below the national average in healthcare, 15.6 percent below the national average in transportation and 24.1 percent below the national average in housing.

“Cost of living is an attractive feature for our community,” Mays said.

The low cost of living is a selling point when the chamber is trying to recruit new businesses and industries because it means prospective employees will enjoy a nice cost of living, he explained. It also means that people moving into Northwest Arkansas from areas where the cost of living is above the national average can afford to take a hefty pay-cut and still live at the same standard they are accustomed to, while those moving out of the area will need a substantial raise to maintain their standard of living.

Local cities that saw an increase in sales tax receipts were:

• Bentonville, up $215,774 to $2.17 million

• Fayetteville, up $1,510 to $3.46 million

• Gentry, up $150 to $48,362

• Lincoln, up $5,257 to $47,843

• Rogers, up $143,931 to $3.04 million

• Springdale, up $132,926 to $2.53 million

Cities that saw a decrease in sales tax receipts were:

• Eureka Springs, down $78,345 to $251,692